Recession and The Threat Of Economic Depression in Indonesia

The Fiscal Policy Office Ministry of Finance announced that Indonesia had entered into an economic recession. That is based on two consecutive negative Indonesian economic growth. Although data on third Indonesia’s economic growth in the third quarter has not been officially announced, according to Febrio Kacaribu as the head of the BKF, the Ministry of Finance stated that Indonesia has been in recession, even since the beginning of the first quarter of 2020 since Covid-19 announce in Indonesia.

Although the head of the BKF said that Indonesia had experienced a recession since the first quarter, the data on Indonesia’s economic growth in the first quarter showed a positive figure of 2.97%. This growth is considered very small when compared to the economic growth in the same quarter in 2019. The more dependent a country’s economy is on the global economy, the faster the recession will occur in that country. The Indonesian government continues to make efforts to maintain domestic economic activity by implementing ‘Pembatasan Sosial Berskala Besar’ (PSBB) and avoiding full lockdowns. The difference between PSBB and lockdown is that the PSBB still allows economic activity in essential sectors, while lockdown stops all economic activities.

The steps taken by the Indonesian government are right. If maintaining domestic economic activity is unsuccessful, be aware that the economy has the potential for economic depression. Economic depression is characterized if the gross domestic product grows negatively in two consecutive quarters (scientist agreement). In a depressed state, layoffs are even worse because economic activity has almost stopped. The revival of an economy from depression usually results from innovations that have emerged under the influence of technological advances and human creativity. Innovation can create new goods and make an independent investment.

Is Indonesia ready if the worst possible economic depression occurs? The answer can be yes or no. So it is better if as a citizen of Indonesia to help the government in reviving the national economy so that Indonesia can avoid economic depression by empowering small business, investing in Indonesian products, and paying taxes on time.